As you are getting prepared to onboard with a new client, you likely have every note in order and all paperwork expertly prepared. (After all, processes and preparedness make all the difference in communicating professionalism to your clients!)
However, like most financial professionals, you may avoid the daunting topic of bringing up a discussion around fees. In fact, one recent survey found that only 56 percent of wealth management clients said they understand the fees that they pay.
Now that clients and prospects have greater access to browse advising services and fees -- and even have opportunities to work with robo-advisors -- it’s more important than ever that clients know exactly how you as their advisor justify your fees.
Communicating and discussing fees with your clients can certainly be an uneasy conversation at first. However, if you’re willing to give it a shot and practice doing so regularly, you can successfully set yourself apart from the rest of the competition!
Not only that, having a conversation upfront with your client about what you offer and what it costs will show them that you understand their perspective. This in turn will ultimately lead to greater transparency and trust, leading to a long-lasting advisor-client relationship.
In this blog post, I’ll break down three tips for confidentially communicating the value for the fees you charge for financial planning.
My number one tip for communicating your fees to clients is to be proactive and bring them up before the client even asks.
Fees are guaranteed to be on your client’s mind when you first start working with them. Don’t put them in the position of having to broach the topic first! This puts them in an uncomfortable spot, and some clients may feel you’re hiding something -- which can lead to distrust.
Instead, choose to take the reins during your initial meeting and be the first to ensure that they understand how your fees work! This demonstrates to your client that you are confident in what you do and can have these types of sensitive conversations, no matter what the topic might be.
It’s always best to have control over discussions about fees rather than finding yourself on the defensive or in “reaction mode.”
The second tip to confidently talk about the value for your fees is to describe your fees with clarity and make sure clients know your value proposition.
People do not necessarily want to go with the cheapest option when it comes to paying for financial advice! They would rather understand the relationship between the cost and value of your services and comfortably grasp why your fees are fair.
You can start by getting specific about the services you offer and tailor them to your client’s individual needs. Whether it’s college planning, retirement, or all of that and then some, you’ll want to go into as much detail as possible.
You can then provide a simple, concise fee schedule and show exactly how your fees are calculated.
Finally, it is important to be mindful of how you use industry language based on your client’s level of financial literacy and document your fee schedule “on paper.”
You will work with clients from varied ends of the spectrum -- those who want to know every single technical detail and others who aren’t familiar with industry jargon yet still want to know that you have their best interest at heart. Regardless, your client should be able to explain your fee structure back to you in layman’s terms.
Their understanding of your compensation will further build your credibility, which can lead to more referrals.
Along with this, it’s best to provide a physical document with your fee schedule and clearly defined services. If you expect your clients to commit to you at a certain fee level, it’s fair to commit back to them in writing (even if that document is provided to them electronically).
I recommend revisiting the fee discussion periodically -- perhaps at a semi-annual or annual review -- to be sure that your client is on the same exact page as you. As clients have high expectations for transparency, carving out the time to talk about fees and listen to your clients’ perspectives can have a dramatic and powerful influence on your practice.
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Posted by Lana Dalton
Lana is a Happiness Champion (aka Relationship Manager) at AdvicePay and loves helping enterprise users implement and optimize the AdvicePay platform. After graduating from the University of Washington in Seattle, Lana spent the past three years working in the tech industry, helping organizations implement software, create training content, and establish onboarding processes. When she’s not helping our enterprise users, you can find Lana trail running, backcountry skiing, and cooking different types of cuisine.